URGENT Exchange Contracts Before Completion Certificate HELP

tommo2007

Hi guys

Quick question for a friend (definitely not for me).....but they are buying a new build property.

The builder wants to exchange contracts this week with a completion date of 28 October 2011. They have agreed price, but the builder has said if they don't exchange this week he will put the property back on the market.

The solicitor is saying (the buyer's solicitor, the seller's solicitor is saying they can exchange) that they cannot exchange contracts because there is no completion certificate!??!?! To me this sounds daft as surely you can exchange with completion subject to the completion certificate?

Any URGENT help would be fantastic.

Thanks guys

Tom

G_M

I'm guessing the 'completion certificate' in this case does not refer to Completion of the purchase, but construction completion.

By exchanging the buyer is commited to buy even if final construction date is delayed or there are faults and the sign-off of Building Regs etc is witheld.

tommo2007

G_M wrote: »

I'm guessing the 'completion certificate' in this case does not refer to Completion of the purchase, but construction completion.

By exchanging the buyer is commited to buy even if final construction date is delayed or there are faults and the sign-off of Building Regs etc is witheld.

Hi G_M

Thank you for the reply. Yes, you are correct in that the 'completion certificate' relates to the construction completion in this case.

Your second paragraph makes total sense as the exchange DOES make the purchase legally binding, but does this mean a solicitor CANNOT complete? As one solicitor is saying they CAN and one saying they can't.....just want the ACTUAL answer!!

Thanks again

G_M

They can Complete in the sense that ownership of the land, and the building, can be transferred to the buyer.

However if the building is not fully finished, or has not been 'signed off' as finished (complete) the buyer then has an incomplete house.

The builder has his money, so the incentive to finish, or rectify faults etc, is limited - he'll be more interested in devoting his own and his workmen's time to the next job!

DVardysShadow

tommo2007 wrote: »

Hi G_M

Thank you for the reply. Yes, you are correct in that the 'completion certificate' relates to the construction completion in this case.

Your second paragraph makes total sense as the exchange DOES make the purchase legally binding, but does this mean a solicitor CANNOT complete? As one solicitor is saying they CAN and one saying they can't.....just want the ACTUAL answer!!

Thanks again

The solicitor could complete in theory. But in practice, your solicitor will not complete, because they are also acting for your lender - and as part of their duty to the lender, they will have to tell the lender that there is no completion certificate. And as part of their duty to you, they will do everything to stop you exchanging, short of go against a very clear and direct instruction, for which you will have to sign a disclaimer.

The best which can be done is to make a 'conditional' exchange, subject to a completion certificate being made available 7 days before purchase completion. If you go down this road, then you must ensure that there is an overall date after which the contract is void if they are not able to provide the completion certificate.

tommo2007

G_M wrote: »

They can Complete in the sense that ownership of the land, and the building, can be transferred to the buyer.

However if the building is not fully finished, or has not been 'signed off' as finished (complete) the buyer then has an incomplete house.

The builder has his money, so the incentive to finish, or rectify faults etc, is limited - he'll be more interested in devoting his own and his workmen's time to the next job!

That makes sense - however the ONLY reason there is no completion certificate is because the drive has not yet been tarmacced. A full survey has been carried out on the property and there is no more than the drive awaiting finishing - and that is booked in for next week!!!

DVardysShadow wrote: »

The solicitor could complete in theory.

I'm talking exchange, not completion.

DVardysShadow wrote: »

The solicitor could complete in theory. But in practice, your solicitor will not complete, because they are also acting for your lender - and as part of their duty to the lender, they will have to tell the lender that there is no completion certificate. And as part of their duty to you, they will do everything to stop you exchanging, short of go against a very clear and direct instruction, for which you will have to sign a disclaimer.

The best which can be done is to make a 'conditional' exchange, subject to a completion certificate being made available 7 days before purchase completion. If you go down this road, then you must ensure that there is an overall date after which the contract is void if they are not able to provide the completion certificate.

Thank you for the reply, again this makes very clear sense and the 'condition exchange' you speak of sounds like a road that can be gone down.

Like I say above, the rest of the house is completed and a full survey and a full look over by the (to be) occupant has been done and everything is fine. It's just the driveway which requires the tarmac down and then the property is finished.

From where I am sitting, I think about big building companies (Barratts, Bloors, etc etc) and they have exchange sometime very early in the process no problem, so I can't see why this solicitor is being as awkward, especially if this condition exchange is available!!!

DVardysShadow

tommo2007 wrote: »

That makes sense - however the ONLY reason there is no completion certificate is because the drive has not yet been tarmacced. A full survey has been carried out on the property and there is no more than the drive awaiting finishing - and that is booked in for next week!!!



I'm talking exchange, not completion.



Thank you for the reply, again this makes very clear sense and the 'condition exchange' you speak of sounds like a road that can be gone down.

Like I say above, the rest of the house is completed and a full survey and a full look over by the (to be) occupant has been done and everything is fine. It's just the driveway which requires the tarmac down and then the property is finished.

From where I am sitting, I think about big building companies (Barratts, Bloors, etc etc) and they have exchange sometime very early in the process no problem, so I can't see why this solicitor is being as awkward, especially if this condition exchange is available!!!

I know you are talking exchange. But the issue stalling exchange is that [unless you are a cash buyer] your lender will not let you complete - nor is it wise to do so as a cash buyer.

Your friend's solicitor is not being awkward. They are doing what they should do. If your friend exchanges contracts, but the property is not complete, the solicitor will be duty bound to drop your friend right in it by not drawing down the funds from the lender. In turn, your friend will probably lose his deposit and become liable for some quite steep costs.

As the matter outstanding is quite well defined, another approach is to ask for a completion certificate with reservations stating that the drive remains to be tarmaced. The sale could then proceed with a generous agreed retention for the tarmacing.

But as there is so little holding up the deal, the builder should just get it done ASAP. It really is too early for them to talk about putting it back on the market - it is at least mildy bullying IMO and I would be telling them that exchange of contracts is in their hands.

tommo2007

Hi DVardysShadow - thank you for another response to this matter

Please don't feel from my above remark that I was being aggressive or arrogant btw (I just read it back to myself) - I didn't mean it to come across like it might have done!

I totally understand what you are saying and you know a hell of a lot more than me about this as they have said they will do as you suggest and give a conditional exchange, holding back some of the deposit as a deposit for the tarmacing.

As you say also, this does seem very trivial and why it hasn't just been done is beyond me!!!

Thank you again for all your help

Tom

DVardysShadow

No, I didn't take it badly - I just wanted to be clear and know that you were clear too.

sonastin

You can actually make the contract say anything (legal that is) and then exchange. Provided the vendors also agree, with the right drafting your solicitor could make it binding that they paint the entire interior of the property shocking pink with yellow stripes and if they fail to do so, they are the ones who are failing to complete with all the costs that offers.

Now that is an extreme example which would fall down for many reasons - vendors would never agree, solicitors would be reluctant to draft such an extreme clause in case the courts decided to interpret it as trivial regardless of how much they stressed it would be considered a material breach etc. but it could be done if it really was important to the buyer and the only way the vendor could get the sale!

But given the bully-boy stance of the vendor in this situation, getting their agreement to any sort of compromise conditional exchange could be the hardest part.

GDB2222

tommo2007 wrote: »

Hi guys

Quick question for a friend (definitely not for me).....but they are buying a new build property.

The builder wants to exchange contracts this week with a completion date of 28 October 2011. They have agreed price, but the builder has said if they don't exchange this week he will put the property back on the market.

:rotfl: Sure thing! There are threats, and then there are hollow threats.

The solicitor is saying (the buyer's solicitor, the seller's solicitor is saying they can exchange) that they cannot exchange contracts because there is no completion certificate!??!?! To me this sounds daft as surely you can exchange with completion subject to the completion certificate?

Any URGENT help would be fantastic.

Thanks guys

Tom

Can they agree a retention for the drive, say double the likely cost, so as to give the builder an incentive to get on with it.